Online trading is the most popular form of investing, and provides you with the fastest and most reliable way to execute your trade. If you are old school and want to call your broker to place a trade, it will likely cost you more and it will definitely take more time. Wait time for popular brokers can be 5-15 minutes, where online orders can be executed in seconds. Here are some of the steps you need to take as you begin online investing.
Opening your account
- You will need to register, supplying information such as your name, email, and phone number. In some cases you will need to supply your address, proof of address or even your social security or national identification number
- Many brokers want to know about your trading experience to determine what types of products you are eligible to trade. Many reputable brokers want to avoid providing customers with tools that will allow that to lose all their capital.
- Once you are registered, you need to fund your account. There are several ways to fund your account including a bank wire, a check, a debit card or even a credit card. This will depend on your domicile. For example, in the U.S. you cannot fund your account with a credit card.
Evaluating Trading Tools
Once you open your trading account, it’s important to evaluate the tools that are available to help you make your trading decision. This could include evaluating the charting and graphical packages that your broker has available. In addition, many reputable brokers supply clients with economic research including a financial calendar that shows all the different important data points that will be released during the week or the month.
You also want to see if your broker has an education section. Here you might be able to find many different trading strategies and how to use them. Check to see if your broker offers technical analysis tools and an explanation on how to use these tools to enhance your trading. Your broker might also offer news and analysis. The more information you know the better your trading decision will be.
Each broker will have a different trading platform. Before you risk real capital, make sure you understand how trades are executed. Many brokers have demo accounts that allow you to execute traders without risking real capital. If your broker has this capability, give it a try so you become familiar with executing a trade. There is no harm with making a mistake with demonstration money.
If you plan on using your broker’s trading app platform, make sure you also take this for a test drive before you execute a trade. If you are on the go, you want to make sure that you can see your balances and position on all platforms offered by your broker. For example, the trades you make on your PC should show up on your mobile device.
Trading online is the most efficient and cost effective way to execute a transaction. After you register you should evaluate the trading platform before you deposit capital. Test drive all the platforms you plan on using to make sure you understand all of the nuances of your brokers trading platform.